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I have warned, successively, that the Budget forecasts on tax revenue growth were ludicrously high both for this year and for several to come, writes Richard Murphy.

I also suggested that the OBR was discredited by endorsing them. As the table below shows, I did the maths to show why that had to be the case (it wasn’t hard to do). And now, as the FT reports:

“Britain’s economic recovery has generated far less tax revenue than forecast, raising the prospect of even deeper spending cuts after the general election to balance the budget.

“The latest blow to the public finances was an admission from the Office of Budget Responsibility on Monday that income tax receipts – the biggest single source of government revenue – are likely to fall short of government targets this year, despite record levels of employment.”

Three immediate issues follow from this. The first is that the quality of Treasury forecasting is dire. No one in their right minds could have believed the levels of growth forecast in March 2014 as shown in this table, the data for which is taken straight from the March 2014 budget with my extrapolation of growth rates added:

Screen-Shot-2014-06-10-at-07_50_24

It wasn’t just growth in tax revenues that was forecast, it was growth way beyond any underlying level of economic increase in activity that was suggested was going to happen this year, and that was always utterly implausible.

Second, we have to consider the possibility that the Treasury just lied when putting forward these growth projections. They are so ridiculous, that has to be the best possible explanation for them.

And we have to the consider that the OBR may have been complicit in this – because if it was truly independent it should have been flagging up how unlikely this revenue growth was in March, and not now.

And what does it all mean?

It means all Osborne’s economic claims are bunkum – but you should read Mr Murphy’s analysis at Tax Research UK.

Follow me on Twitter: @MidWalesMike

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